For a long time, learning about Revenue (tax) Collection in the Metro has been a bit of a pet project of mine. I met two guys who had started their own consulting firm, based in the south. The service they offer is to collect data on all revenue sources in the District – market stalls, stores, egg and breads, you name it. Another city, apparently, doubled their Internally Generated Funds (IGF) by doing so!

Knowing these revenue sources is key. If you have the data, you can do a quick check on each source of revenue and see if they’ve paid that year. This lets you target your revenue collection and confirm that your revenue sources are actually being tapped in a given year. Increasing your ‘coverage rate’ (the percentage of ‘revenue sources’ actually paying in a given year) means more money in the Metro’s pocket – obviously a good thing!

Equally important, however, is the consequence of having a low coverage rate. If that’s the case, most people aren’t paying taxes. People therefore operate under the assumption that they won’t have to. Think of it like a game they’re playing with the Revenue Collectors, and when you lose, you have to pay – but the odds are on your side. Therefore, when someone gets ‘caught’ by the tax collector, they have two options: They can pay the tax, and get the receipt proving they did so, or they can pay a bribe (less than the tax, and Revenue Collectors are notorious for accepting them), not get a receipt, and put their number back in the lottery, knowing that odds are they won’t get picked again. Once you have good data on that collection, however, then you can increase your collection rates, and putting your number back in that lottery looks much less attractive. Theoretically, people start demanding receipts, corruption goes down, and IGF goes up, not to mention the social benefits of legitimizing taxation (a whole other topic!).

So these consultants are offering a pretty cool service to the Assembly. They’ve been around a couple times, demonstrated their product based on a District they did in the south, put in a proposal, and talked to all the key folks. But, the project has stalled, and isn’t moving anywhere.

I was chatting with one of the (three) sub-Metro directors about this last week. Sub-Metros are under the Metro Assembly in the hierarchy, and are delegated some of the tasks, one of which is revenue collection. This is immediately a challenge since it means you have to implement THREE databases instead of just one, but isn’t really a game changer. He kept insisting it was a matter of resources, and I kept pushing him on the fact that, to me, it’s an investment. The Metro has money that they could spend on this if they wanted to and prioritized it, but they don’t, even though it would pay off practically overnight (I hypothesize).

Finally, we started to get closer to the root. A big development partner has a project to supply computers, software, and training to all revenue collection branches of the Metros and Municipal Assemblies. They promised the project a while back, and it’s gotten as far as delivering SOME of the computers (they still haven’t actually made it to the Sub-Metro, where they’re eventually going to be needed, however). They haven’t received training, they haven’t received software, there’s no guarantee that either of those will be any GOOD, but the promise is made. And the Assembly will sit and wait until that promise is fulfilled. Why spend money on something you know you’re going to get for free later?

I was still ranting though. The pay-off time would be so short, I was convinced that just going ahead and investing the money would be worthwhile anyways, especially now that those computers have been delivered! The Director shook his head. The nail in the coffin? If they went ahead and did that, then if they ever got audited, it would be counted as a double purchase. So, hands tied, we wait.

To me this was a clear example of the skewed incentives and sometimes downright undermining of government that happens because of the ‘development sector’. Check out my colleague Mina’s post for his reflections on The Industry.

11 Responses to Great Ideas… stalled

Interesting post. Do NGOs ever have frameworks for deciding which projects would likely happen without their support so that they can treat these projects differently (eg, avoid them or complete them faster to avoid slowing the community down)? I suppose that this is pretty optimistic.

I’ve never seen really seen or heard anything like that before. There’s a lot of push to get donors engaging with each other so they don’t step on each others feet (and usually government is involved) and some broader initiatives like the Sector Wide Approach, that does the same on a much bigger scale (http://en.wikipedia.org/wiki/Sector-Wide_Approach).

In general, I think development partners come in with a project or a project idea, and as soon as the government hears about it, they’ll keep quiet about anything they have going on because they don’t want to risk losing the funds.

I’d love to see more bottom-up development – for example, the Metro going to a development partner looking for support for an initiative they’ve come up with! This does happen sometimes, but not often!

Another question Dan, and perhaps a naive one (I’m good at those). What would happen if you contacted the NGO and told them what was happening, as a third-party with very detailed insight. Do you think intervening in the way – explaining to another NGO party that their program, while designed to create positive change, is actually delaying it – would create problems or potentially a partnership opportunity? One where they realize that they could get information directly from someone working IN the assembly, so they could better tailor their work.

Good question Ward. You might have something there though, I hadn’t really thought about trying to influence this project…. I doubt I could get any traction with this particular DP but you don’t know ’til you try!

I think part of the problem is that a lot of these big DPs don’t really care about the intricacies of the District. They have an idea (and I think it’s a good idea, don’t get me wrong) and they will roll it out across Ghana. Maybe they’re slowing things down in this one Metro, but it’s happening in 8 others where otherwise it just wouldn’t – in their eyes that’s probably a win.

For me this is super frustrating because it runs TOTALLY counter to decentralization. At the end of the day, and everyone will agree with this IN PRINCIPAL, local governments should be running the show themselves. They should be generating these ideas and executing on them, just as what might have happened in this case. I’ve given an example here of how donors have slowed down a cool initiative and undermined government, but more fundamentally they’re undermining decentralization. On the one hand they’re saying ‘decentralization is good, let’s give control over government resources to Districts’, and on the other, they’re saying ‘this is what’s good for you, take it, and we don’t trust you to figure it out and manage it on your own so we’ll do it for you’.

This is starting to sound like all those complexities you tried to help me understand while I was there. I actually keep your drawing from that day handy – the one showing the various departments and relationships – and I pull it out to try and understand it periodically. I usually end up shaking my head and putting it away. It makes me want to drink. Heavily.

Regardless, I wonder if that type of influencing – a more formal version of you picking up the phone and calling the organization – might be a concept worth looking into. Does that organization have people on the ground? Do they get this feedback? Do they know the impact the program is having? Are there other organizations in a similar position?

I suspect some organizations would see value in the previously unattainable insight. Might there even be a way to offer this sort of feedback loop as a means of revenue generation?

Yeah, I know I’m waaaaay out on a limb, but if organizations have no other way to get this information, there has to be an opportunity in here to build relationships (if not funds).

I’m going to ask a bit of a dream question here. Dan, if you were to have free reign to control one of these development partners, how would you change their approach to project funding and implementation so that they keep with the spirit of a decentralized system?

Another very thoughtful post Dan, wonderful! What other big ideas are in your bag of tricks that you are pondering on at the moment? I’m assuming blog posts will come on those topics, but as a sense of what’s quickly going in in your mind? Hypotheses? Next steps? Failures?

Great post Dan. It’s especially frustrating to see an innovative product being offered by the private sector, which has the incentive to deliver a quality product, being stalled by a development project with no such incentive. All for some free development $$.

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